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Wed, May 07, 2003 - Page 12 News List

Airlines to lose US$10 billion: IATA

SARS Passenger volumes have plunged because of the virus, hurting the industry more than the Iraqi war

BLOOMBERG , GENEVA

The world's airlines will have losses of US$10 billion this year as passengers choose not to fly after severe acute respiratory syndrome (SARS) outbreak in Asia, said the International Air Transport Association.

IATA forecasts that the industry losses, a total of US$4 billion on US domestic routes and the rest on international routes, are worse than those triggered by the conflict in Iraq, said Giovanni Bisignani, the association's director general, at a press conference.

"The impact has been much, much greater than what happened in the Iraq war," said Bisignani, who estimates global industry losses will total US$30 billion since the Sept. 11 attacks.

"The last three years have been the worst since civil aviation started," he said.

Passenger volumes "dropped dramatically" because of the virus, said Bisignani, saying numbers fell as much as 60 percent in Hong Kong, 40 percent in Singapore and Seoul and as much as 37 percent in Beijing and Kuala Lumpur.

In areas that haven't been affected by SARS, he said, passenger numbers have fallen between 10 percent and 15 percent.

Nine of the largest U.S. carriers, including AMR Corp's American Airlines and UAL Corp's United Airlines, have posted US$3.56 billion in losses for the first quarter, which is typically the worst of the year. Of those, only Southwest Airlines Co had a profit. US Airways Group Inc has yet to report results.

Cathay Pacific Airways Ltd, Asia's fifth-biggest carrier, said it will cut its final dividend by half, saving about US$120 million, after the virus sparked the biggest plunge in bookings in the airline's 57-year history.

Deutsche Lufthansa AG, Europe's third-largest airline, is losing 55 million euros (US$61.7 million) in sales a week, partly because of the spread of SARS.

IATA, which represents 277 airlines, has called on governments to cut landing fees and air traffic control charges in an attempt to control airlines' costs at airports during the SARS crisis.

Singapore, Malaysia, Thailand, the Philippines and Taiwan have already agreed to help, Bisignani said.

The IATA chief said he's still waiting for a reply to his request to the Japanese government.

Last week the World Health Organization said that Vietnam has contained the disease, and also lifted its recommendation against travel to Toronto, Canada.

The agency says that the disease may be coming under control.

"We're optimistic that we're seeing containment in all areas outside of China," said Mark Salter, an agency virologist.

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